What is a KYC analyst?

Sounds like a silly question to ask, doesn’t it? But, as the saying goes, there’s no such thing as a silly question.

My reason for asking – as part of our Advent Sunday insight series, which is focusing on the topic of know your customer (KYC) – is simply to highlight the vital role that the KYC analyst plays in the compliance function. Before I get into the specifics of the role, however, let me first explain some of the reasons why KYC matters so much.

The fact is that by verifying customers’ identities and intentions, and then understanding their transaction patterns, banks and other financial institutions are able to more accurately pinpoint suspicious activities. Money laundering and terrorist financing often relies on anonymously opened accounts, and the increasingly effective KYC analysis carried out has led to increased reporting of suspicious transactions. This doesn’t necessarily mean there’s more bad activity out there; we’re just better at detecting it now than we ever were before.

Additionally, the fact that regulations are becoming increasingly stricter, means that an effective KYC process is even more important. In this regard, FinTech companies are helping by collating big data, which helps financial institutions identify data that is much more accurate, meaning they’re in a much better position to comply with the regulations.

So, let’s now look at the role itself: what exactly is required of a KYC analyst? What are the specific duties and responsibilities that make up this key compliance function?

A KYC analyst primarily reviews documentation for new customer accounts, evaluates high-risk accounts and analyses new customer processes and policies. They also study market trends and observe customer behaviour patterns within their organisation. In addition, KYC analysts can also be involved in reviewing new product proposals and analysing risk and compliance issues relating to these products.

KYC analysts work primarily for banks or other financial institutions, though they can be employed in other types of businesses, such as manufacturing, technology or consulting firms. Their duties and responsibilities include:

evaluating new account documentation

KYC analysts conduct research to verify information on new account documents. They also ensure that new account holders are not high-risk customers and do not have restrictions or negative activities that would impact their opening of a new account.

reviewing policies and procedures

A KYC analyst typically analyses existing policies and procedures relating to new customer research and account analysis to ensure compliance and make suggestions for improvements to these processes. They are often involved in generating reports covering the findings of these and will meet with senior management staff to review existing and proposed procedures.

analysing market trends and customer behaviour

By watching sales and market trends and observing customer behaviour, a KYC analyst can make decisions and suggestions in the areas of marketing, product development and customer satisfaction. They will meet regularly with those in marketing, production and customer service to report these trends and seek ways to improve the customer experience and draw new clients to the company.

KYC analytical skills

In an occupation that involves data analysis and research and the reporting of the findings and observations resulting from these processes, it is important that the KYC analyst possesses strong verbal and written communication skills. It is also vital that they have above-average decision-making, time management and organisational skills. They should have knowledge of project management and team-building processes and be familiar with various research methodologies and resources. A KYC analyst must also be a detail-oriented multi-tasker who can work with little supervision. In addition, an understanding of risk and compliance is key. Being able to make accurate reports reflecting the risk analysis of new customers and compliance with internal and external policies and procedures relating to analysis procedures is vital to the role.

Maybe you already work as a KYC analyst, or maybe it’s an area you’re interested in moving into. Either way, I hope this has provided some insight and reassurance into a role that plays a crucial part in managing customer risk.

How can ICA help?

TheICA Certificate in KYC and CDDis an online training course provides a foundation knowledge of core know your customer (KYC) and customer due diligence (CDD) concepts, an introduction to CDD frameworks and an overview of the key components of working in the KYC environment.

The ICA Advanced Certificate in Practical Customer Due Diligence has been designed for KYC Analysts and professionals who manage risk in the Customer Due Diligence (CDD) process. The only professional qualification in practical CDD in the UK, this course will help you make sound judgements and pinpoint areas of potential risk.

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